Larry Salci
Consulting Services
Thursday, April 25, 2024
Morrison Knudsen Transit Group/Amerail
President & CEO

In the mid 1980s MK had successfully entered the remanufacture of passenger railcars with its base operations in Hornell, New York. In 1991-92 it entered the new passenger rail car market won several large orders with the Chicago Transit Authority, Metro North Commuter Railroad, Amtrak, BART San Francisco, Caltrans, and Chicago Metra. MK Transit opened two new plants in Chicago and Pittsburg, CA. These contracts were bonded by MK's sureties and several transit agencies had provided large cash advances on the contracts secured by irrevocable letters of credit with MK's banks. However, by early 1994 the performance of the Transit Group had deteriorated significantly.

In April 2004 MK's Chairman, William Agee recruited me as President of the MK Transit Group based in Chicago to quickly access and manage the problem. I quickly assembled a new management team to address the financial crisis. My analysis determined the contracts suffered performance and profitability problems due to inaccurate estimates to complete the contracts and peak working capital requirements beyond MK's financial resources due to broad corporate financial problems. The Transit Group, along with similar problems in MK's Engineering Group and Construction Group, created a liquidity crisis that threatened MK Corporation's viability as a going concern, one of America's oldest and most successful engineering and construction giants.

I designed a plan to capture several hundred million in cash that was resident in the troubled and incomplete railcar contracts but the plan required production and delivery of the railcars under a new company required to avoid a creditor initiated bankruptcy. The Restructuring Plan called for the creation of a new, bankruptcy remote, company (Amerail) that was created as a special purpose company (LLC) to finish the transit contracts, but required the Banks and Sureties to provide an additional $175 million in working capital and the transit agencies to transfer their railcar contracts to the new company. After 9 months of negotiations, the banks and sureties agreed to the creation of the new company and additional working capital and the transit agencies transferred their contracts to Amerail. The financial and production achievements of the new company (Amerail) management, under Mr. Salciā€™s leadership, are as follows:

  • Created new organization, recruited new CFO, VP of Engineering, VP Business Development, and VP & GM for Chicago Plant and Production Mgr. for Pittsburg Plant.
  • Negotiated and secured $175 million new credit facility with banks and sureties to meet peak working capital requirements for new company.
  • Oversaw the design and implementation of new cost control, cost estimation, cash flow, production scheduling, and management reporting systems.
  • Oversaw the re-negotiation of 40 major supplier contracts resulting in improved material delivery, $15 million cost reduction, and $16 million reduced vendor claims.
  • Negotiated customer contract concessions (avoided liquidated damage penalties for late delivery and other contract disputes) with an economic value of $32 million.
  • Completed production and delivery of over 700 railcars on or ahead of customer schedules, previously one to two years late in delivery.
  • Completed production and delivery of two new remanufacture contracts with the MBTA, bid and awarded in 1995, that resulted in 20% gross profit margins.
  • At completion of production sold core assets to Alstom Transportation that preserved over 1,000 US jobs and continued US railcar manufacturing capacity for the US transit and intercity passenger railcar market.
"Larry Salci is an exceptional leader who has a keen ear for organizational needs and is able to keep an eye on financial priorities. He was able to take the helm of the careening MK Transit Group to rapidly rally the organization and galvanize the attention of employees, suppliers, and customers, and to get each and every contract in order, completing on time and on budget. Beyond credibility, talent, and exquisitely professional and well balanced approach to even the toughest and intractable of problems, Larry brought unimpeachable integrity. I would work for him again at any time. He is an asset to any organization".

James Gerber
Former MK Transit Group CFO
Chief Financial Officer, Worldstrides Inc.